Editor’s Note: You may recall last month’s Construction Trends article that introduced you to the new standard document to facilitate green building projects. The new ConsensusDOCS™ 310 Green Building Addendum was developed by industry members to help make a green building project run smoothly. This article tells contractors how the new document can help them—and what to watch out for.
The construction industry has traditionally emphasized efficiency and has not been overly concerned with the environment. However, the recent trend toward “green building” and an emphasis on sustainability is sweeping the country and changing this mindset dramatically.
Whether green building is being encouraged for altruistic reasons or simply to be a “politically correct” marketing technique, one thing is certain: Green building is here to stay. Those contractors and subcontractors who quickly educate themselves and implement green building strategies will position themselves to successfully compete in a rapidly growing segment of the market—estimated at 10 percent for this year. The opportunities are almost endless for contractors and subcontractors to develop this emerging work in future years, but as with any exciting opportunity, there are risks as well.
The Risks
First, contractors should expect to incur many more hours of paperwork on a green building job because they will need to document the “chain of custody” on materials and the like. For example, the specifications may require a casework subcontractor to prove that the wood materials came from a local source. Contractors need to read the bid documents carefully and include adequate costs for these additional requirements in their bids.
Second, many bid documents will specifically list a particular product or process to utilize to try to gain as many LEED points as possible. What happens if the special green material (such as drywall from a source within 500 miles) is unavailable in a timely fashion, or at a reasonable price? Will the contractor receive a time extension or price increase to provide the owner’s desired product?
Third, some bid documents are requiring contractors to ensure LEED certification or a certain amount of energy savings. Such a guarantee leaves contractors wide open to claims should a certain level of LEED certification or energy savings not be achieved.
The Reward
Now for the first time, owners, design professionals and contractors have a contract document that deals with the unique issues associated with “green building.” That document is the ConsensusDOCS 310 – Green Building Addendum.
The Green Building Addendum is intended to modify existing design or construction documents whenever third party rating recognition (such as LEED certification) is sought. It designates (by checking a box) a project participant (architect/engineer, contractor, construction manager or consultant) as the Green Building Facilitator (GBF) who will be assigned to coordinate and facilitate the green building goals.
Only the GBF has the contractual responsibility to facilitate the owner’s desired green status consistent with a separate contract between the owner and the GBF. The owner is to be given advice from the GBF on the cost and time implications of any green measure, but only the owner is to decide what green measures he wants to pay for. The design professional is to then incorporate the green measures into the design so long as he has no reasonable objection to them. Then, contractor is to build pursuant to the plans and specs unless he has reasonable concerns about their constructability. Importantly, the Green Building Addendum is drafted in a manner so that nothing in the addendum is intended to impose liability on a design professional or contractor for a failure to achieve a certain level of certification or other green status.
While the GBF has potential liability for a failure to achieve green status consistent with whatever obligations the GBF has assumed in his contract with the owner, the Green Building Addenda states that the owner’s loss of income, tax credits, energy savings and the like are “consequential damages,” which often are waived in contracts. Such a waiver or limitation of liability would protect the GBF from open-ended liability in the event that a certain green status is not achieved.
It’s Not a Fad
All members of the construction team benefit from educating each other on reasonable expectations up front before misunderstandings or conflicts develop. This is particularly true when dealing with a relatively new subject like green building. The Green Building Addendum now gives all project participants a tool to manage expectations and minimize uncertainties and conflict.
Of course, there is always a risk of a claim on any project. There are special green building insurance coverages becoming available, so it is important that contractors contact an experienced insurance professional to determine what policies are best for them, and what will provide adequate coverage in the event of a claim. This is particularly important if you will be serving as a GBF.
Green building is far more than a fad and has the potential to dramatically improve our environment. As sustainability becomes increasingly important, contractors who adopt these green building strategies will be well situated to compete against those unwilling to change.
Don Gregory is a construction lawyer in Columbus, Ohio, who serves as general counsel to the Association of the Wall and Ceiling Industry, the American Subcontractors Association and several other national construction trade associations. He participated in the drafting of the Green Building Addendum and can be reached at [email protected].
